Pricing Problems and Possibilities
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Here’s the gist of a story that appeared in The New York Times back in December: Barnes & Noble wants deeper discounts. They want this so that (a) they can give further discounts to customers (who are reportedly appalled at the rising price of books) and (b) so they can make more money.
Well, I’m all for everybody making more money, and I’m all for books being so affordable that people just want to read all the time. But I can’t help but relate this demand from an industry giant to my own humble experience.
Once upon a time, my company sold directly to a modest number of retailers at a 40% discount. Period. We priced our books at a multiple of manufacturing costs–six or seven times paper, printing, and binding, if I remember correctly–so that it all worked out. The retailer got its margin, we got ours. We weren’t getting rich, but then this isn’t that kind of business.
Next, in order to reach more retailers, we found a distributor who wanted a hefty percentage of sales. Not that they didn’t earn it–they paid sales commissions, warehoused, shipped, billed, and collected. We raised our prices to accommodate the distributor’s fees, made less money per unit sold, but sold more books. So it still worked.
The Start of the Nada Syndrome
Then the superstore phenomenon began. Whatever we priced our books at, the big players wanted to sell for less. And the…IBPA Members – Click here to view the full article (login required).
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